The Institutionalist Theory of Institutional Change Revisited: The Institutional Dichotomy in a More Formal Perspective

Abstract

The Theory of Institutional Change as elaborated by Paul D. Bush (1983, 1987) in the tradition of Thorstein Veblen, Clarence Ayres, and John F. Foster (“VAFB paradigm”) provided a central device for institutional analysis, both theoretical and empirical, with its clarification of the value bases and of different forms and dynamics of behaviors and value-behavior patterns (V-Bs). Particularly Bush’s 1987 paper pushed Institutionalism to a certain limit by elaborating the logical V-B relations and their change, which had been underexplored for long. Coming from a different “galaxy”, a critical formal approach, such as game theory (GT) – often applied only bluntly in the economics mainstream – has been applied by institutional and evolutionary economists in an evolutionary-institutional perspective in the last three decades, in order to close methodological gaps and to further operationalize, formalize, and develop Institutionalism. This paper strives to demonstrate that a proper interpretation allows bridging the institutionalist theory of institutional change and an evolutionary-institutional interpretation of GT (EIGT). It reveals surprising equivalences and complementarities with potential future synergies. It allows for a deeper analysis of institutions, revealing the value base in EIGT, and a deeper analysis of the instrumental-ceremonial asymmetry and of related ceremonial dominance and encapsulation. So Institutionalism might cut across traditional boundaries with respect to deeper analyses.

Keywords

• institutions
• institutional change
• institutional dichotomy
• ceremonial encapsulation
• institutional game theory